PROFILE OF AUTOMOBILE INDUSTRY

HISTORY OF INDUSTRY

In 1897, the first car ran on an Indian road. Through the 1930s, cars were only imported, and in very small numbers.

An embryonic automotive industry emerged in India in the 1940s Hindustan was launched in 1942, long-time competitor Premier in 1944, building GM and Fiat products respectively. Mahindra & mahindra was established by two brothers in 1945, and began assembly of Jeep CJ-3A utility vehicles. Following  independence  in 1947, the Government of India and the private sector launched efforts to create an automotive-component manufacturing industry to supply to the automobile industry. In 1953, an import substitution programme was launched, and the import of fully built-up cars began to be restricted.

However, growth was relatively slow in the 1950s and 1960s, due to nationalisation and the license raj, which hampered the Indian private sector. After 1970, with restrictions on the import of vehicles set, the automotive industry started to grow; but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury item. In the 1970s, price controls were finally lifted, inserting a competitive element into the automobile market.[10] However, by the 1980s, the automobile market was still dominated by Hindustan and Premier, who sold superannuated products in fairly limited numbers. During the eighties, a few competitors began to arrive on the scene.

In 1986, to promote the auto industry, the government established the Delhi Auto Expo. The 1986 Expo was a showcase for how the Indian automotive industry was absorbing new technologies, promoting indigenous research and development, and adapting these technologies for the rugged conditions of India. The nine-day show was attended by then Prime Minister Rajiv Gandhi .

INTRODUCTION OF INDUSTRY

The automotive industry in India is one of the largest automotive markets in the world. It was previously one of the fastest growing markets globally, but it is currently experiencing flat or negative growth rates. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand, overtaking Thailand to become third in 2010. As of 2010, India was home to 40 million passenger vehicles.

More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making India the second fastest growing automobile market in the world (after China). India's passenger car and commercial vehicle manufacturing industry recently overtook Brazil to become the sixth largest in the world, with an annual production of more than 3.9 million units in 2011. From 2011 to 2012, the industry grew 16-18%, selling around three million units. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015, not 5 million as previously projected.

In 2011, there were 3,695 factories producing automotive parts in all of India. The average firm made US$6 million in annual revenue with profits close to US$400 thousand.

India is a very favorable market for small cars be it production, sales or export. Since the Indian automobile industry is the largest manufacturer of small cars companies like Hyundai and Nissan Motors export about 2,40,000 and 2,50,000 annually. India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Indian automobile exports registered a 22.30 percent growth in the year 2009. The growth trend was as follows: Two Wheelers- 32.31 percent, Commercial Vehicle - 19.10 percent and Passenger Cars.

INDIAN AUTOMOBILE EXPORT MARKET

India is a very favorable market for small cars be it production, sales or export. Since the Indian automobile industry is the largest manufacturer of small cars companies like Hyundai and Nissan Motors export about 2,40,000 and 2,50,000 annually. India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Indian automobile exports registered a 22.30 percent growth in the year 2009. The growth trend was as follows: Two Wheelers- 32.31 percent, Commercial Vehicle - 19.10 percent and Passenger Cars grew by 19.10% .

KEY AUTOMOBILE MANUFACTURS IN INDIA

Maruti Udyog General Motors Ford India Limited Mahindra&Mahindra ltd. Bajaj Auto Tata Motors Daewoo Motors india Hero Motors Hindustan Motors Hyundai Motors India Limited Royal Enfield Motors Telco TVS Motors DC Designs Swaraj Mazda Limited

PROFILE OF THE COMPANY

INTRODUCTION OF MAHINDRA&MAHINDRA

Mahindra and Mahindra Limited (M&M) is an Indian multinational automobile manufacturing corporation headquartered in Mumbai, Maharashtra, India. It is one of the largest vehicle manufacturers by production in India and the largest manufacturer of tractors across the world. It is a part of Mahindra Group, an Indian conglomerate.

It was ranked as the 10th most trusted brand in India, by The Brand Trust Report, India Study 2014. It was ranked 21st in the list of top companies of India in Fortune India 500 in 2011.

Its major competitors in the Indian market include Maruti Suzuki, Tata Motors, Ashok Leyland, Toyota, Hyundai, Mercedes-Benz (Merc) and others.

Mahindra & Mahindra, branded on its products usually as 'Mahindra', produces SUVs, saloon cars, pickups, commercial vehicles, and two wheeled motorcycles and tractors. It owns assembly plants in India, Mainland China (PRC), the United Kingdom, and has three assembly plants in the United States. Mahindra maintains business relations with foreign companies like Renault SA, France.

M&M has a global presence and its products are exported to several countries. Its global subsidiaries include Mahindra Europe S.r.l. based in Italy, Mahindra USA Inc., Mahindra South Africa and Mahindra (China) Tractor Co. Ltd.

Mahindra started making passenger vehicles firstly with the Logan in April 2007 under the Mahindra Renault joint venture. M&M will make its maiden entry into the heavy trucks segment with the Mahindra Truck and Bus Division, the joint venture with International Truck, USA.

Mahindra produces a wide range of vehicles including MUVs, LCVs and three wheelers. It manufactures over 20 models of cars including larger, multi-utility vehicles like the Scorpio and the Bolero. It formerly had a joint venture with Ford called Ford India Private Limited to build passenger cars.

At the 2008 Delhi Auto Show, Mahindra executives said the company is pursuing an aggressive product expansion program that would see the launch of several new platforms and vehicles over the next three years, including an entry-level SUV designed to seat five passengers and powered by a small turbo diesel engine. True to their word, Mahindra & Mahindra launched the Mahindra Xylo in January 2009, and as of June 2009, the Xylo has sold over 15000 units.

Also in early 2008, Mahindra commenced its first overseas CKD operations with the launch of the Mahindra Scorpio in Egypt, in partnership with the Bavarian Auto Group. This was soon

followed by assembly facilities in Brazil. Vehicles assembled at the plant in Bramont, Manaus, include Scorpio Pik Ups in single and double cab pick-up body styles as well as SUVs.

Mahindra planned to sell the diesel SUVs and pickup trucks starting in late 2010 in North America through an independent distributor, Global Vehicles USA, based in Alpharetta, Georgia. Mahindra announced it will import pickup trucks from India in knockdown kit (CKD)form to circumvent the Chicken tax. CKDs are complete vehicles that will be assembled in the U.S. from kits of parts shipped in crates. On 18 October 2010, however, it was reported that Mahindra had indefinitely delayed the launch of vehicles into the North American market, citing legal issues between it and Global Vehicles after Mahindra retracted its contract with Global Vehicles earlier in 2010, due to a decision to sell the vehicles directly to consumers instead of through Global Vehicles. However, a November 2010 report quoted John Perez, the CEO of Global Vehicles USA, as estimating that he expects Mahindra’s small diesel pickups to go on sale in the U.S. by spring 2011, although legal complications remain, and Perez, while hopeful, admits that arbitration could take more than a year. Later reports suggest that the delays may be due to an Mahindra scrapping the original model of the truck and replacing it with an upgraded one before selling them to Americans In June 2012, a mass tort lawsuit was filed against Mahindra by its American dealers, alleging the company of conspiracy and fraud.

Mahindra & Mahindra has a controlling stake in Mahindra Reva Electric Vehicles. In 2011, it also gained a controlling stake in South Korea's SsangYong Motor Company.

Mahindra has launched its relatively heavily publicized SUV, XUV 500, code named as W201 in September 2011. The new SUV by Mahindra has been designed in-house and it is developed on the first global SUV platform that could be used for developing more SUVs. In India, the new Mahindra XUV 500 comes in a price range between Rs 11.40 lakh to Rs 15 lakh. The company is expected to launch 3 products in CY'15 (2 SUVs and 1 CV) and an XUV 500 hybrid. M&M’s two wheeler segment will launch a new scooter in Q1FY'15. Besides India, the company also targets Europe, Africa, Australia and Latin America for this model. Mahindra President Mr. Pawan Goenka stated that the company plans to launch six new models this fiscal. The company launched CNG version of its mini truck Maxximo on 29 June 2012. A new version of Verito in diesel and petrol options was launched by the company on 26 July 2012 to compete with Maruti's Dzire and Toyota Kirloskar Motor's Etios.

Beginnings

Mahindra & Mahindra's Kandivali Unit, Auto Sector Main gate overlooking Western Express Highway, Mumbai.

Mahindra & Mahindra was set up as a steel trading company in 1945 in Ludhiana as Mahindra & Mohammed by brothers K.C.Mahindra and J.C. Mahindra and Malik Ghulam Mohammed. After India gained independence and Pakistan was formed, Mohammed emigrated to Pakistan. The

company changed its name to Mahindra & Mahindra in 1948. It eventually saw business opportunity in expanding into manufacturing and selling larger MUVs, starting with assembly under licence of the Willys Jeep in India. Soon established as the Jeep manufacturers of India, the company later commenced manufacturing light commercial vehicles (LCVs) and agricultural tractors. Today, Mahindra & Mahindra is a key player in the utility vehicle manufacturing and branding sectors in the Indian automobile industry with its flagship Mahindra XUV500 and uses India's growing global market presence in both the automotive and farming industries to push its products in other countries.

Over the past few years, the company has taken interest in new industries and in foreign markets. They entered the two-wheeler industry by taking over Kinetic Motors in India. M&M also has controlling stake in REVA Electric Car Company and acquired South Korea's SsangYong Motor Company in 2011. In the 2010-11 M&M entered in micro drip irrigation with the takeover of EPC Industrie' Ltd, Nashik.

JOINT VENTURE & OTHER ANNOUNCEMENT

In 2004, Tata Motors acquired Daewoo's South Korea-based truck manufacturing unit, Daewoo Commercial Vehicles Company, later renamed Tata Daewoo.

On 27 September 2004, Tata Motors rang the opening bell at the New York Stock Exchange to mark the listing of Tata Motors.

In 2005, Tata Motors acquired a 21% controlling stake in the Spanish bus and coach manufacturer Hispano Carrocera. Tata Motors continued its market area expansion through the introduction of new products such as buses (Starbus and Globus, jointly developed with subsidiary Hispano Carrocera) and trucks (Novus, jointly developed with subsidiary Tata Daewoo).

In 2006, Tata formed a joint venture with the Brazil-based Marcopolo, Tata Marcopolo Bus, to manufacture fully built buses and coaches.

In 2008, Tata Motors acquired the British car maker Jaguar Land Rover, manufacturer of the Jaguar, Land Rover, and Daimler luxury car brands, from Ford Motor Company.

In May 2009, Tata unveiled the Tata World Truck range jointly developed with Tata Daewoo; the range went on sale in South Korea, South Africa, the SAARC countries, and the Middle East at the end of 2009.

Tata acquired full ownership of Hispano Carrocera in 2009.

In 2009, its Lucknow plant was awarded the "Best of All" Rajiv Gandhi National Quality Award.

In 2010, Tata Motors acquired an 80% stake in the Italian design and engineering company Trilix for €1.85 million. The acquisition formed part of the company's plan to enhance its styling and design capabilities.

In 2012, Tata Motors announced it would invest around  6 billion in the development of Futuristic Infantry Combat Vehicles in collaboration with DRDO.

In 2013, Tata Motors announced it will sell in India, the first vehicle in the world to run on compressed air (engines designed by the French company MDI) and dubbed "Mini CAT".

In 2014, Tata Motors introduced first Truck Racing championship in India "T1 Prima Truck Racing Championship".

On 26 January 2014, the Managing Director Karl Slym was found dead. He fell from the 22nd floor to the fourth floor of the Shangri-La Hotel in Bangkok, where he was to attend a meeting of Tata Motors Thailand.

MANUFACTURING FACLITIES

Tata Motors owes its leading position in the Indian automobile industry to its strong focus on indigenization. This focus has driven the Company to set up world-class manufacturing units with state-of-the-art technology. Every stage of product evolution-design, development, manufacturing, assembly and quality control, is carried out meticulously. Our manufacturing plants are situated at Jamshedpur in the East, Pune and Sanand in the West and Lucknow and Pantnagar in the North.

JAMSHEDPUR

The Jamshedpur facility, Tata Motors' first, was established in 1945 to manufacture steam locomotives. It led the company's foray into commercial vehicles in 1954. It has been modernized through the decades, with a particularly intense scale in the last 10 years and has led the company's evolution into a manufacturer of global repute.

PUNE

The Pune unit is spread over two geographical regions- Pimpri (800 acres) and Chinchwad (130 acres). It was established in 1966 and has a Production Engineering Division, which has one of the most versatile tool making facilities in the Indian sub-continent. Industry experts rate the fully automated Foundries at Chinchwad and Maval among the best, worldwide. The Iron Foundry at Chinchwad produced 29334 Tons of high precision castings in 2012-13 while the Iron Foundry at Maval produced 10646 Tons of spheroidal Iron castings in 2012-13.

LUCKHNOW

Tata Motors Lucknow (TML-Lucknow) is an important production facility of Tata Motors Limited, which was established in 1992 to meet the growing demand for Commercial Vehicles in the Indian market. The state of art plant is strongly backed up by an Engineering Research Centre (ERC) & Service set-up to support with latest technology & cater to the complexities of automobile manufacturing. Fully Built Vehicle business (FBV), which is one of the fast growing areas of business, is also head quartered here. This plant rolls out commercial vehicles & is specialized in the designing & manufacturing of a range of modern buses which includes Low-floor, Semi Low-floor, and High Deck & CNG Buses. Lucknow plant also specializes in integral bus manufacturing & has recently commissioned JV Company, Tata Marcopolo Motors Ltd. in the premises.

DHARWAD

Tata Motors' Dharwad Plant, Located on the Pune- Bangalore highway around 425 km northwest from Bengaluru, became operational on "Founders Day" 3rd March 2012. This is the latest green field project by Tata Motors being commissioned for production of Ace Zip. Dharwad plant in a record time rolled out 15,000 Ace Zip's in first year of operations

SANAD

Tata Motors' plant for the Tata Nano at Sanand, in Ahmedabad district of Gujarat, marks the culmination of the Company’s goal of making the Tata Nano available to hundreds of thousands of families, desirous of the car a safe, affordable and environmental friendly mode of transport. The capacity of the plant, to begin with, will be 250,000 cars per year to be achieved in phases, and with some balancing is expandable up to 350,000 cars per year. Provision for further capacity expansion has also been incorporated in this location.

PANTNAGAR

The Company has set up a plant for its mini-truck Ace and the passenger carrier Magic (based on the Ace platform) at Pantnagar in Uttarakhand. The plant began commercial production in August 2007. This is the company's fourth plant, after Jamshedpur (commercial vehicles), Pune (commercial vehicles and passenger vehicles) and Lucknow (commercial vehicles). The plant is spread over 953 acres, of which 337 acres is occupied by the vendor park.

AWARDS

Awards won by MAHINDRA&MAHINDRA LTD. include:

Bombay Chamber Good Corporate Citizen Award for 2006-07.

Business world FICCI-SEDF Corporate Social Responsibility Award 2007.

The Brand Trust Report ranked M&M as India's 10th Most Trusted Brand in its India Study

2014 survey (from 20,000 brands analyzed).

Its Farm Equipment division received the Deming Prize in 2003.

Its Farm Equipment division received the Japan Quality Medal in 2007.

The US based Reputation Institute ranked M&M amongst the top Ten Indian companies in

its 'Global 200: The World's Best Corporate Reputations' list for 2008.

Blue bytes News rated M&M as India's second Most Reputed Car Company (reported in

their study titled Reputation Benchmark Study) conducted for the Auto (Cars) Sector in

2012.

INTRODUCTION OF THE TOPIC

INTRODUCTION TO ANALYSIS

A systematic examination and evaluation of data or information, by breaking it into its component parts to uncover their interrelationships. Opposite of synthesis.

An examination of data and facts to uncover and understand cause-effect relationships, thus providing basis for problem solving and decision making.

FUNDAMENTAL ANALYSIS

Fundamental analysis is the examination of the underlying forces that affect the well being of the economy, industry groups, and companies. As with most analysis, the goal is to derive a forecast and profit from future price movements. At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition. At the industry level, there might be an examination of supply and demand forces for the products offered. For the national economy, fundamental analysis might focus on economic data to assess the present and future growth of the economy. To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stocks current fair value and forecast future value. If fair value is not equal to the current stock price, fundamental analysts believe that the stock is either over or under valued and the market price will ultimately gravitate towards fair value. Fundamentalists do not heed the advice of the random walkers and

believe that markets are weak form efficient. By believing that prices do not accurately reflect all available information, fundamental analysts look to capitalize on perceived price discrepancies.

TWO APPROACHES OF FUNDAMENTAL ANALYSIS

While carrying out fundamental analysis, investors can use either of the following approaches:

TOP DOWN APPROACH

In this approach, an analyst investigates both international and national economic indicators , such as economy rates energy price , inflation and interst rates. The search for the best security then tricles down to the analysis of total sales, price level and foreign competition in a sector in order to identify the best business in the sector.

BOTTOM UP APPROACH

In this approach, an analyst start the search with specific businesses, irrespective of their industry/region.

HOW DOES FUNDAMENTAL ANALYSIS WORKS

Fundamental analysis is carried with the aim of predicting the future performance of a company. It is based on the theory that the market price of a security tends to moves towards its real value or intrinsic. Thus the intrinsic value of a security being higher than the security market value represent a time to buy. If the value of the security is lower than its market price, investor should sell it.

Steps involved in fundamental analysis are :

Macroeconomic analysis. Industry sector analysis, which involves the analysis of companies that are a

part of the sector. Situational analysis of a company. Financial analysis of a company.

LONG –TERM TRENDS

Fundamental analysis good for long term investments based on long term. The ability to identify and predict longterm economic, demographic, technological or consumer trends can benefit patient investors who pick the right industry group or companies.

BUSINESS INSIGHT

One of the most obvious, but less tangible, rewards of fundamental analysis is the development of a thorough understanding of the business. After such pain taking research and analysis, an investor will be familiar with the key revenue and profit driver behind a company. Earnings and earnings expectation can be potent drivers of equity prices even some technicians will agree to that.

A good understanding can help investor avoid companies that are prone to shortfalls and identify those that continue to deliver. In addition to understanding of the key value drivers and companies with in an industry. A stock price is heavily influenced by its industry group. By studying these groups, investor can better position themselves to identify opportunities that high risk (tech), low risk (utilities), growth oriented (computer), value driven (oil), non cyclical (consumer staples), cyclical (transportation) or income oriented (high yield).

THE FUNDAMENTAL ANALYSIS CAN BE DIVIDED IN THREE PARTS

Economic analysis Industry analysis

Company analysis

ECONOMIC ANALYSIS

Economic Analysis covers the study of the country's economic indicators such as new orders, money supply, stock price indices, stocks of unfinished goods, new business formations, consumer price index and unit labour costs. Important economic considerations would include interest rates and inflation and its impact on the stock market, the level of government debt, the level of corporate debts, monetary and fiscal policy.

TOOLS FOR ECONOMIC ANALYSIS

GROSS DOMESTIC PRODUCT MONITORY POLICY AND LIQIDITY INFLATION INTERST RATES INTERNATIONAL INFLUENCES FISCAL POLICY

GROSS DOMESTIC PRODUCT

Gross domestic product (GDP) is defined by the Organization for Economic Co-operation and Development(OECD) as "an aggregate measure of production equal to the sum of the gross values added of all resident, institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs)

INFLATION

In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.

INTEREST RATES

An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors). Specifically, the interest rate is a percentage of principal paid a certain number of times per period for all periods during the total term of the loan or credit. Interest rates are normally expressed as a percentage of the principal for a period of one year, sometimes they are expressed for different periods like for a month or a day. Different interest rates exist parallelly for the same or comparable time periods, depending on the default probability of the borrower, the residual term, the payback currency, and many more determinants of a loan or credit. For example, a company borrows capital from a bank to buy new assets for its business, and in return the lender receives rights on the new assets as collateral and interest at a predetermined interest rate for deferring the use of funds and instead lending it to the borrower. A commercial bank can usually borrow at much lower interest rates from the central bank than the rate at which companies can borrow from the commercial bank.

FISCAL POLICY

Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply. These two policies are used in various combinations to direct a country's

economic goals. Here we look at how fiscal policy works, how it must be monitored and how its implementation may affect different people in an economy.

Before the Great Depression, which lasted from Sept. 4, 1929 to the late 1930s or early 1940s, the government's approach to the economy was laissez-faire. Following World War II, it was determined that the government had to take a proactive role in the economy to regulate unemployment, business cycles, inflation and the cost of money. By using a mix of monetary and fiscal policies (depending on the political orientations and the philosophies of those in power at a particular time, one policy may dominate over another), governments are able to control economic phenomena.

INDUSTRY ANALYSIS

Industry Analysis covers the structure and state of competition in the industry, nature and prospects of demand for products and services of the industry, cost conditions and profitability, technology and research requirements, the immediate and long term outlook for sales and profit.

TOOLS FOR INDUSTRY ANALYSIS

Industry performance over time Differences in industry risk Prediction about market behavior

COMPANY ANALYSIS

Company Analysis covers management analysis and financial analysis. Management analysis would consider the business acumen of the CEO and top managers, the past record and performance of the CEO and the corporate work ethic. Financial Analysis would consider revenue, costs, earnings of the company and the company's capital structure as reflected by its debt to equity ratio. Financial Analysis in the form of financial ratio analysis compares the company's current stock price to its earnings, dividends, and assets. Theses financial valuation ratios and then compared the financial valuation of other companies in the same industry to identify overvalued and undervalued companies in terms of earnings, dividends and assets.

TOOLS FOR COMPANY ANALYSIS

PORTER FIVE FORCE MODEL FINANCIAL STATEMENT OF THE COMPANY ROA ROI ROE EPS DPS DIVIDEND YIELD RATIO ANALYSIS

REVIEW OF LITERATURE

RESEARCH METHODOLOGY

DATA ANALYSIS AND INTERPRETATION

ECONOMIC ANALYSIS

The Economy of India is the seventh-largest in the world by nominal GDP and the third-largest by purchasing power parity(PPP). The country is one of the G-20 major economies, a member of  BRICS and a developing economy among the top 20 global traders according to the WTO.

According to the Indian Finance Ministry the annual growth rate of the Indian economy is projected to have increased to 7.4% in 2014-15 as compared with 6.9% in the fiscal year 2013-14. In an annual report, the IMF forecast that the Indian Economy would grow by 7.5% percent in the 2015-16 fiscal year starting on April 1, 2015, up from 7.2% (2014–15).

India was the 19th-largest merchandise and the 6th largest services exporter in the world in 2013; it imported a total of $616.7 billion worth of merchandise and services in 2013, as the 12th-largest merchandise and 7th largest services importer.[32] The agricultural sector is the largest employer in India's economy but contributes a declining share of its GDP (13.7% in 2012-13).[6] Its manufacturing industry has held a constant share of its economic contribution, while the fastest-growing part of the economy has been its services sector — which includes, among others, the construction, telecommunications, software and information technologies, infrastructure, tourism, education, health care, travel, trade, and banking industries.

The post independence-era Indian economy (from 1947 to 1991) was a mixed economy with an inward-looking, centrally planned, interventionist policies and import-substituting economic model that failed to take advantage of the post-war

expansion of trade and that nationalized many sectors of its economy.[33] India's share of global trade fell from 1.3% in 1953 to 0.5% in 1983.[34] This model contributed to widespread inefficiencies and corruption, and it was poorly implemented.

After a fiscal crisis in 1991, India has increasingly adopted free-market principles and liberalized its economy to international trade. These reforms were started by former Finance minister Manmohan Singh under the guidance of Prime Minister P.V. Narasimha Rao. They eliminated much of  License, a pre- and post-British era mechanism of strict government controls on setting up new industry. Following these economic reforms, and a strong focus on developing national infrastructure such as the Golden Quadrilateral project by former Prime Minister Atal Bihari Vajpayee, the country's economic growth progressed at a rapid pace, with relatively large increases in per-capita incomes.[36] The south western state of Maharashtra contributes the highest towards India's GDP among all states, while Bihar is among its poorest states in terms of GNI per capita. Mumbai, Maharashtra is known as the trade and financial capital of India.

SWOT ANALYSIS OF INDIAN ECONOMY

Indian industry has come a long way from the command, control style of functioning rooted in an inward looking Import substitution policy to an export orientation, globally competitive, quality driven style of functioning.  In short term, with improved investment, scenario coupled with government continual through and reforms, the industrial performance is expected to do better.  But in large run, the performance depends on how well the reform are initiated, the investment and growth in Infrastructure, the continued availability of natural resources avail of low-cost , high skill workforce and global market scenario.  For sure is that it will gain momentum on the wheel of growth has been set to motion.

STRENTHS  

Vast Industrial Presence in both Public and Private Sectors Huge demand for Domestic Industrial goods. Avail of Low-cost, Skilled Human Resources. Proactive government continued thrust on reforms- Further liberalization under

process. Increasing investment in real assets (Capacity Expanding), Inflow of FDI

(Foreign Direct Investment) across Industrial sector.

WEAKNESSES

 Presence of Vast Industrial sickness  Outdated labor laws, and presence of too many political labor and trade union.  Nascent Regulatory systems to check misuse of market power by firms.  Dependency of Subsidies(SSI – Small scale industries)  Inadequate and poor quality infrastructure cost and time delays.

OPPORTUNITIES

Growing Competition of Indian industry due to focus on efficient and quality. Vast export marked to explore. Growing recognition of “Made in India” brand in global market Major growth through outscoring opportunities Presence of Deming award winning firms (Focus on quality) Growing number of overseas investment and acquisition by Indian Firms.

THREATS

Heavy competition in manufacturing field from china. Power crises and the virtuous growth cycling manufacturing sector. Large informal sector, Poor working condition and low wages. Inclusion of social (Labor) issues in trade dialogues could happens exports (e.g.,

Child labor) High corruption and inadequate environmental safety norms could affect

sustainability.

ECONOMIC SURVEY 2014-2015

A Growth Rate of over 8 Per Cent Expected for the Coming Year Economic Survey highlights the need for balance between ‘Make in India’

and ‘Skilling India’ Major Reform Initiatives Undertaken by Government in Banking, Insurance

and Financial Sector Wiping Every Tear from Every Eye: The Jan Dhan Yojana, Aadhaar and

Mobile Numbers Provide the Solution Improvement in Female Literacy and Educational Challenges Skill Development and Employment are major Challenges: Economic

Survey Economic Survey Recommends Reform of Railway’s Structure,

Commercial Practices, Overhaul of Technology India needs to create additional Fiscal Space: Economic Survey 2014 – 15 India’s National Solar Mission Being Scaled up Five-Fold to 100,000

Megawatts Infrastructure Growth in terms of Eight Core Industries Higher than

Industrial Growth since 2011-12 Government Remains Committed to Fiscal Consolidation; Economic Survey

says Enhanced Revenue Generation is a Priority External Sector is returning to the path of strength and resilience: Economic

Survey Services Sector Clocks Double Digit Growth Hyper-Growth in Tech start ups in India, says Economic Survey on Services

Sector

The Fourteenth Finance Commission (FFC) will enhance Fiscal Federalism in India: Economic Survey 2014-15

Government approves a Rs. 200 crore Central Sector Scheme for implementing e-platform for agri-marketing

Economic Survey 2014-15 Highlights Revive public investment to improve investment climate: Economic Survey

2014 – 15 Create National Common Market in Agricultural Commodities: Economic

Survey 2014-15 From Carbon Subsidy to Carbon Tax: India’s Green Actions Food Subsidy Bill stands at Rs. 107823.75 crore during 2014-15 (upto

January, 2015), shows an increase of 20% over previous year Foodgrains production for 2014-15 estimated at 257.07 million tonnes; will

exceed average food grain production of last five years by 8.5 million tones Inflation shows a declining trend during the year 2014-15 (April-December)

OVERVIEW OF INDIAN ECONOMY

The combination of protectionist, import-substitution, Fabian socialism, social democratic-inspired policies governed India for sometime after the end of British occupation. The economy was then characterized by extensive regulation, protectionism, public ownership of large monopolies, pervasive corruption and slow growth. Since 1991, continuing economic liberalization has moved the country towards a market-based economy.[38][39] By 2008, India had established itself as one of the world's faster-growing economies. Growth significantly slowed to 6.8% in 2008–09, but subsequently recovered to 7.4% in 2009–10, while the fiscal deficit rose from 5.9% to a high 6.5% during the same period.[40] India's current account deficit surged to 4.1% of GDP during Q2 FY11 against 3.2% the previous quarter. The unemployment rate for 2012–13, according to Government of India's Labour Bureau, was 4.7% nationwide, by UPS method;[12] and 3% by NSSO method.[13] India's consumer price inflation has ranged between 8.9 to 12% over the 2009-2013 period.

.

GROSS DOMESTIC PRODUCT

In India, the growth rate in GDP measures the change in the seasonally adjusted value of the goods and services produced by the Indian economy during the quarter. India is the world’s tenth largest economy and the second most populous. The most important and the fastest growing sector of Indian economy are services. Trade, hotels, transport and communication; financing, insurance, real estate and business services and community, social and personal services account for more than 60 percent of GDP. Agriculture, forestry and fishing constitute around 12 percent of the output, but employs more than 50 percent of the labor force. Manufacturing accounts for 15 percent of GDP, construction for another 8 percent and mining, quarrying, electricity, gas and water supply for the remaining 5 percent.

Actua Previous Highest Lowest Dates Unit Frequency

l1.60 2.20 5.80 -1.90 1996-2014 % Quarterly

INDIA INFLATION RATE

The inflation rate in India was recorded at 5.17 percent in March of 2015. Inflation Rate in India averaged 8.69 percent from 2012 until 2015, reaching an all time high of 11.16 percent in November of 2013 and a record low of 4.38 percent in November of 2014. Inflation Rate in India is reported by the Ministry of Statistics and Programme Implementation (MOSPI), India.

YEAR INFLATION (in %)

2015 6.74

2014 6.37

2013 10.92

2012 9.30

2011 8.87

2010 12.11

2009 8.32

2009 2010 2011 2012 2013 2014 20150

2

4

6

8

10

12

14

inflation

inflation

In 2013, the consumer price index replaced the wholesale price index (WPI) as a main measure of inflation. In India, the most important category in the consumer price index is Food and beverages (45.86 percent of total weight). Housing accounts for 10 percent; Transport and communication for 8.6 percent; Fuel and light for 6.84 percent; Clothing and footwear for 6.5 percent; Medical care for 5.9 percent and education for 4.5 percent. Consumer price changes in India can be very volatile due to dependence on energy imports, the uncertain impact of monsoon rains on its large farm sector, difficulties transporting food items to market because of its poor roads and infrastructure and high fiscal deficit.

INDIA FORIEN DIRECT INVESTMENT

Foreign Direct Investment in India decreased to 3089 USD Million in February of 2015 from 4687 USD Million in January of 2015. Foreign Direct Investment in India averaged 1053.52 USD Million from 1995 until 2015, reaching an all time high of 5670 USD Million in February of 2008 and a record low of -60 USD Million in February of 2014. Foreign Direct Investment in India is reported by the Reserve Bank of India.

INDUSTRY PERFORMANCE IN 2013-2014

PRODUCTION

the cumulative production data for

DEOMSTIC SALES

EXPORT

India is a very favorable market for small cars be it production, sales or export. Since the Indian automobile industry is the largest manufacturer of small cars companies like Hyundai and Nissan Motors export about 2,40,000 and 2,50,000 annually. India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Indian automobile exports registered a 22.30 percent growth in the year 2009. The growth trend was as follows: Two Wheelers- 32.31 percent, Commercial Vehicle - 19.10 percent and Passenger Cars grew by 19.10% .

SWOT ANALYSIS

STRENTHS

Domestic Market is large Government provides monetary assistance for manufacturing units Reduced Labor cost

WEAKNESS

Infrastructural setbacks Low productivity Too many taxes levied by government increase the cost of production Low investments in Research and Development

OPPOURTUNITIES

Reduction in Excise duty Rural demand is rising

Income level is at a constant increase

THREATS

Increasing rates of interest Too much competition Rising cost of raw materials

AUTO INDUSTRY

INTRODUCTION

The Indian auto industry is one of the largest in the world with an annual production of 21.48 million vehicles in FY 2013-14.

The automobile industry accounts for 22 per cent of the country's manufacturing gross domestic product (GDP).

An expanding middle class, a young population, and an increasing interest of the companies in exploring the rural markets have made the two wheelers segment (with 80 per cent market share) the leader of the Indian automobile market. The overall passenger vehicle segment has 14 per cent market share.

India is also a substantial auto exporter, with solid export growth expectations for the near future. Various initiatives by the Government of India and the major automobile players in the Indian market is expected to make India a leader in the Two Wheeler and Four Wheeler market in the world by 2020.

KEY STATISTICS

Sales of commercial vehicles in India grew 5.3 per cent to 52,481 units in January 2015 from a year ago, according to Society of Indian Automobile Manufacturers (SIAM).

Sales of cars also grew for a third month in a row to 169,300 units in January 2015, up 3.14 per cent from the year-ago period.

Car market leader Maruti Suzuki India witnessed 8.6 per cent higher sales at approximately 118,551 units in February 2015, out of which 107,892 were sold in domestic market and 10,659 units were exported.

Hyundai Motor India Ltd (HMIL) reported a 2.4 per cent growth in total sales at 47,612 units in February, compared with 46,505 units in the same month last year.

In the two-wheeler segment, Hero MotoCorp witnessed sales of 484,769 units in February 2015.

TVS Motor Co posted 15 per cent higher sales at 204,565 units against 177,662 units.

Bajaj Auto sold a total of 243,000 two and three-wheelers segment.

MAJOR DEVLOPMENT AND INVESTMENTS

Mercedes-Benz India plans to increase its investment to Rs 850 crore (US$ 158.88 million) by 2014. Volkswagen Group aims to increase output by 10-15 per cent on a €100 million (US$ 126.35 million) investment at its production facilities inAurangabad and Chakan in Maharashtra. Nissan plans to introduce ten new passenger vehicles by the end of March 2016. VE Commercial Vehicles (VECV), the joint venture (JV) between Volvo and Eicher, is readying a whole newrange of trucks with new platforms, engines and cabins. Toyota Kirloskar plans to increase capacity at its two plants in Bidadi, Karnataka, from 310,000 units to 400,000 units a year. Capacity at the first plant would rise from 90,000 units to100,000 units, at a cost of Rs 70 crore (US$ 13.08 million) and the second plant's capacity is being increased from 120,000 units to 210,000 units, with an investment of Rs 830 crore (US$ 155.14 million) due to increase in demand for its models especially the Etios and Fortuner. DC Design's Avanti planning its first sports car to be designed and manufactured in India. The car's prototype has been showcased at the 11th Auto Expo and has been priced at Rs 2.5 million (US$ 46,728). Bajaj Auto Ltd has entered into an agreement with Kawasaki Heavy Industries, under which Bajaj motorcycles will be assembled and sold in Indonesia through Kawasaki's distribution network as co-branded products.

GOVERNMENT INITATIVES

The Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route. To boost manufacturing, the government had lowered excise duty on small cars, motorcycles, scooters and commercial vehicles to eight per cent from 12 per cent, on sports utility vehicles to 24 per cent from 30 per cent, on mid-segment cars to 20 per cent from 24 per cent and on large-segment cars to 24 per cent from 27 per cent.

Some of the major initiatives taken by the Government of India are:

The government’s decision to resolve VAT disputes has resulted in the top Indian auto makers namely, Volkswagen, Bajaj Auto, Mahindra & Mahindra and Tata Motors announcing an investment of around Rs 11,500 crore (US$ 1.86 billion) in Maharashtra.

The Automobile Mission Plan for the period 2006–2016, designed by the government is aimed at accelerating and sustaining growth in this sector. Also, the well-established Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays a part in providing a boost to this sector.

The Government of India-appointed SIAM and Automotive Components Manufacturers Association (ACMA) are responsible in working for the development of the Indian automobile industry.

The government plans to come out with policies to introduce clean fuels such as biodiesel, bioethanol and electricity for public transport vehicles and school buses in big cities to tackle air pollution.

The Lok Sabha passed the Motor Vehicles Amendment Bill, 2014, paving the way for regularization of e-rickshaws.

The government has set up National Automotive Testing and R&D Infrastructure Project (NATRIP) at a total cost of US$ 388.5 million to enable the industry to be on par with global standards.

TOP PLAYER IN AUTOMOBILE INDUSTRY

Hindustan Motors

Hindustan Motors is another top automobile company in India. It was once country's largest car manufacturer before Maruti Udyog overpowered it. Its popular model 'Ambassador' has been extensively used as government limousine as well as taxi cab in India.

Tata Motors Tata Motors is the largest automobile company of Asia headquartered in Mumbai, India. Annual Projected revenue for 2010-11 is US$ 27.629 billion. It also occupies the number one position in commercial car segment. Tata Motors enjoys 31.2% of market share in the multi-utility vehicles, which in luxury car segment, it has 6.4% market share. Most of the Tata Motors' vehicles are sold predominantly in India and over 4 million vehicles have been produced domestically within India.

Maruti Suzuki India Limited (MSIL) -

Maruti Suzuki India is an undisputed leader in the Indian automobile industry. Started its journey in February 1981 as Maurti Udyog Limited, the company created history in the Indian automobile market with its hugely popular four-wheeler model Maruti 800. The company became the first Indian automobile company to manufacture one million vehicles in 1994. The company became Maruti Suzuki India Limited on September 17, 2007.

Mahindra & Mahindra Limited (M&M)

Mahindra &Mahindra Limited is another auto-giant in India. A part of the Mahindra Group, M&M is the largest SUV maker in the country. In September 2009, M&M registered a domestic sale of record 26,921 units, comparing to 22,729 units in September 2008 (with an increase of 18.4%). On the other hand, it sold 15,296 units of UV in the same period comparing to 10,641 units in September 2008 (with a whooping growth of 43.7%).

Bajaj Auto

Bajaj Auto is the second largest two-wheeler manufacturer in India. It is also the fourth largest two and three-wheeler maker in the world. In September 2009, Bajaj Auto sold 249,795 units of two-wheelers, comparing to 218,494 units in September 2008 (with a growth rate of 14.3%). During September 2009, it also registered a growth of 12.4% in the domestic two-wheeler sales and 19.9% in two-wheeler export.

ROLE OF AUTOMOBILE INDUSTRY IN INDIA GDP-FOREIGN INVESTMENTS

COMPANY DETAILS

Type PublicTraded as BSE: 500570 (BSE SENSEX Constituent)

NSE: TATAMOTORSNYSE: TTM

Industry AutomotiveFounded 1945Founder Jamsetji TataHeadquarters Mumbai, Maharashtra, IndiaArea served WorldwideKey people Cyrus Pallonji Mistry (Chairman)

Products AutomobilesRevenue US$ 38.6  billion (FY 2013-14)

Operating income US$ 3.86 billion (2014)

Profit US$ 2.29 billion (2014) Total assets US$ 36.05 billion (2014) Total equity US$ 8.91 billion (2014) Number of employees 66,593 (2014)

Parent Tata GroupDivisions Tata Motors CarsSubsidiaries Jaguar Land Rover

Tata DaewooTata Hispano

Slogan More Dreams Per CarWebsite www.tatamotors.com

SHAREHOLDING PATTERN OF TATA MOTORS LTD.

HOLDER NAME NO. OF SHARE %SHARE HOLDING

INDIAN PROMOTORS 939556205 34.33

INSITITUTIONAL INVESTOR

1016184494 37.13

OTHER INVESTOR 614855321 22.47

GENERAL PUBLIC 166117102 6.07

TOTAL 2736713122 100

MARKET SHARE OF TATA MOTORS

COMPANY PASSENGER LCV M&HCV

MARUTI SUZUKI 41% - -

HYUNDAI 14% - -

TATA MOTORS 12% 50% 53%

ASHOK LEYLAND - 6% 26%

SML ISUZU - - 3%

MAHINDRA&MAHINDRA 11% - -

FORCE - 28% -

EICHER M,OTORS - - 13%

OTHER 21% 16 5%

EARNING PER SHARE

YEAR EPS

2010 59.91

2011 49.99

2012 8.98

2013 6.64

2014 7.47

2010 2011 2012 2013 20140

10

20

30

40

50

60

70

EPS

EPS

DIVIDEND PER SHARE

YEAR DPS

2010 15

2011 20

2012 4

2013 2

2014 2

2010 2011 2012 2013 20140

5

10

15

20

25

DPS

DPS

PRICE INFORMATION

RATIO ANALYSIS

CURRENT RATIO

CURRENT RATIO=CURRENTASSETS/ CURRENT LIABILITY

YEAR CURRENT RATIO

2010 0.62

2011 0.73

2012 0.62

2013 0.64

2014 0.60

2010 2011 2012 2013 20140

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

CURRENT RATIO

CURRENT RATIO

OUICK RATIO

Quick ratio=Total Quick Asset/Total Current Liabilities

Quick Asset=Total Current Assets (minus) Inventory

YEAR QUICK RATIO

2010 0.43

2011 0.56

2012 0.43

2013 0.40

2014 0.36

2010 2011 2012 2013 20140

0.1

0.2

0.3

0.4

0.5

0.6

QUICK RATIO

QUICK RATIO

DEBT EQUITY RATIO:

YEAR DEBT EQUITY RATIO

2010 1.12

2011 0.73

2012 0.56

2013 0.74

2014 0.75

2010 2011 2012 2013 20140

0.2

0.4

0.6

0.8

1

1.2

DEBT EQUITY RATIO

DEBT EQUITY RATIO

NET PROFIT RATIO:

YEAR NET PROFIT RATIO

2010 6.26

2011 3.81

2012 2.26

2013 0.64

2014 0.87

2010 2011 2012 2013 20140

1

2

3

4

5

6

7

NET PROFIT RATIO

NET PROFIT RATIO

INVENTORY TURNOVER RATIO

YEAR INVENTORY TURNOVER RATIO

2010 13.50

2011 12.10

2012 11.84

2013 10.05

2014 8.89

2010 2011 2012 2013 20140

2

4

6

8

10

12

14

16

INVENTORY TURNOVER RATIO

INVENTORY TURNOVER RATIO

DEBTOR TURNOVER RATIO

DEBTOR TURNOVER RATIO=NET CREDIT SALE/AVG. TRADE DEBTOR

YEAR

2010

2011

2012

2013

2014

RETURN ON NET WORTH

YEAR RETURN ON NET WORTH

2010 15.15

2011 9.06

2012 6.33

2013 1.57

2014 1.74

2010 2011 2012 2013 20140

2

4

6

8

10

12

14

16

RETURN ON NET WORTH

RETURN ON NET WORTH

RELATIONSHIP BETWEEN TATA MOTORS SHARE PRICE & BSE( SENSEX)

YEAR TATA MOTORS SHARE PRICE

BSE(SENSEX)PRICE

2010

2011

2012

2013

2014

Correlations

RELATIONSHIP BETWEEN TATA MOTORS STOCK PRICE & AUTO INDEX

YEAR

2010

2011

2012

2013

2014

Correlations